Feuz, Dillon M.

By: Feuz, Dillon M.; Umberger, Wendy J.; Calkins, Chris R.; Sitz, Bethany M.
In a study of beef quality, consumers tasted steak samples and participated in an experimental auction to determine their willingness to pay. Steaks differed in marbling, tenderness, country of origin, and aging method. Marbling and tenderness had statistically significant impacts on consumers' palatability ratings for steaks. Tenderness significantly impacted consumers' willingness-to pay values. There appear to be threshold levels of marbling and tenderness, below which consumers discount steaks. Steaks from Australia were rated lower for overall acceptability, and bids were lower than for the U.S. steak samples. Dry-aging methods negatively impacted taste panel ratings and bids.
There is concern in the beef industry that present marketing practices may be impending the transmission of economic signals from consumers to producers. Presently, fed cattle may be sold on a show list, pen-by-pen, or on an individual head basis, and may be priced using live weight, dressed weight, or grid or formula pricing. Market signals are more likely to reach producers if cattle are priced individually. Current value-based pricing are discussed. Three grid pricing systems are evaluated over six marketing dates using data from 5,520 head of fed cattle. Each of the grids do send the anticipated pricing signals in that marbling and leanness are rewarded. However, the magnitudes of the price signals vary over time and across grids.
By: Feuz, Dillon M.; Fausti, Scott W.; Wagner, John J.
Incomplete information generates uncertainty for market participants in the slaughter-cattle market. Buyer and seller behavior in the presence of that uncertainty is examined. Statistically significant risk premiums are charged by packers when buying slaughter cattle on either a live- or dressed-weight basis compared to buying on a grade-and-yield basis. Pratt-Arrow risk-aversion coefficients are calculated for buyers and these remain constant over all marketing methods. Sellers market cattle under all three marketing methods, suggesting producers' attitudes toward risk (risk-aversion coefficients) vary.